Japan's SoftBank aims to list domestic telecoms unit this year

TOKYO (Reuters) - SoftBank Group Corp (9984.T) aims to list its Japanese mobile phone unit this year as CEO Masayoshi Son moves to complete the transformation of the company he founded from domestic telecoms upstart into one of the world’s biggest technology investors.

SoftBank plans to sell shares of core unit SoftBank Corp with the proceeds being used “to strengthen our financial balance and for group growth,” Son told reporters on Wednesday.

The announcement comes almost a month after SoftBank said it was considering listing the business, with local media estimating the proceeds at $18 billion - potentially the biggest IPO by a Japanese company in nearly two decades.

SoftBank has long relied on the unit, which makes up around a third of group sales but two-thirds of profit, as a stable source of cash that can be diverted to its growing number of investments around the world.

“Although some capital will flow out (to investors) as dividends, the listing will raise a significant amount of funds that we can use straight away,” Son said.

However, analyst Motoki Yanase at credit-rating firm Moody’s Japan in a statement said a listing would be credit-negative for the group due to the “partial loss of dividends from SoftBank’s principal subsidiary.”

Son is pursuing his vision of a future powered by interconnected devices and artificial intelligence. He established the Vision Fund, the world’s largest private equity fund, which, in conjunction with the Delta Fund set up to invest in Chinese ride-sharing firm Didi Chuxing, has funneled $27.5 billion into 20 tech firms as at the end of December.

Son on Wednesday said he expected several of the firms SoftBank has invested in to list each year.

SoftBank’s early-stage, $20 million investment in Chinese e-commerce firm Alibaba Group Holding Ltd (BABA.N) was a bet that paid off spectacularly and helped cement Son’s reputation.

It has since shifted to investments of hundreds of millions or billions of dollars in later-stage startups - an approach widely seen as contributing to a spike in startup valuations.

SoftBank’s investments this year include leading an $865 million investment in construction startup Katerra, a $300 million investment in dog-walking app Wag, and the closure of a deal to become Uber Technologies Inc’s largest shareholder.

Separately on Wednesday, the group reported a 2.8 percent fall in third-quarter operating profit, due in part to higher costs. It did not release a forecast for the current business year, saying there were too many uncertain factors.